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TMI Blog2024 (11) TMI 1435X X X X Extracts X X X X X X X X Extracts X X X X ..... t reassessment proceedings have been initiated in the present case after the expiry of 4 years from the end of the relevant assessment year.
As per Proviso to Section 147 of the Act, no action can be taken for reopening after four years unless the Assessing Officer has reason to believe that income has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment.
Since in the case before us in the reasons recorded there is nothing to indicate that reopening is sought on the ground of the failure on the part of the petitioner to disclose fully and truly material facts, the initiation of re-assessment proceedings under Section 147 of the Act cannot be sustained and is, therefore, held to be bad in law. Assessee appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ons and scheme of the Act it be held that the addition of Rs. 5,70,000/- so made by Ld. Assessing Officer and that upheld by Ld. CIT(A) by invoking provisions of section 13(1)(c) of the Act is incorrect and not in accordance with the provisions of section 13 of the Act. Accordingly, the additions so made and that upheld be kindly deleted and Appellant be granted just and proper relief in this respect." 3. The relevant facts are in brief that in the present case the reassessment proceedings were initiated and assessment was framed under Section 147 read with Section 144B of the Act vide Assessment Order, dated 21/03/2023. The Assessing Officer had assessed the income of the Assessee at INR. 12,96,352/- after (a) making addition of INR. 5,70,000/- by disallowing deduction for payment of car hire charged made to Shri Deepak More and (b) making addition of INR. 7,26,352/- by invoking contained in Section 13(1)(c)(ii) read with Section 13(3)(cc) of the Act and withdrawing the benefit exemption under section 11 of the Act in respect of the aforesaid surplus amount of INR. 7,26,352/-. 4. Being aggrieved, the Appellant preferred appeal before the CIT(A) against the above Assessment Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment. The Assessing Officer has failed to specify any default committed by the Appellant in disclosing true and full facts during the assessment proceedings. Reliance in this regard was placed on the judgment of the Hon'ble Bombay High Court in the case of IPCA Laboratories Ltd. Vs. DCIT [2002] 124 Taxman 556 (Bombay) [placed at page 5 to 7 of the paper-book]. 7. Per contra the Learned Departmental Representative vehemently submitted that the Assessing Officer had failed to apply mind to the material furnished by the Appellant during course of original assessment. Since no opinion was formed, the question of change of opinion did not arise. Learned Departmental Representative further submitted that the order of the regular Assessment under Section 143(3) was completely silent on the aspect of car hire charges. Further, the reasonableness of car hire expenses was also not examined during the original assessment proceedings. Thus, the Learned Departmental Representative supported the reasons recorded for reopening the assessment and the validity of the reassessment proceedings. The Learned Departmental Representative also pointed out that no specific ground was raised by the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of CASS. The assessment was completed under Section 143(3) of the I.T, Act, 1961 on 25/08/2015 with assessed income at Rs. Nil. 3. It is also seen that the return of income filed by the assessee trust for A.Y. 2015-16 was selected for scrutiny and assessment was finalized on 30/12/2014. During the scrutiny proceedings, it was noticed that payment made to Shri Deepak More towards car hire charges were disallowed being unjustified and unwarranted as car was never given on rent to the assessee trust and in violation of the fiduciary relation between trust and trustee in guise of leasing of car. Thus, in view of facts of the case for the Assessment Year 2015-16 and provisions of section 13(1)(c) of the Act, car hire charges of Rs. 5,70,000/- paid to Shri Deepak More by the assessee trust during the AY 2013-14 is also violation of fiduciary relation between trust and trustee and thereby reduced its taxable income. Therefore, the income chargeable to tax for the Assessment Year 2013-14 has been under assessed." (Emphasis Supplied) 11. Thus, the only reason stated in the reasons recorded for reopening assessment for the Assessment Year 2013-2014 is that for the Assessment Year 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 143(3) earlier, the income has been made the subject of excessive relief and, therefore, the deeming provision of Explanation 2 would apply. It was also urged that under section 149 assessment can be reopened even after four years if the income escaping assessment is of a specified amount. In this connection, reliance was placed on section 149(1)(a)(ii) of the Act. Findings : 5. We find merit in this petition. We are confining this judgment to the facts of the case. In the present case, the period of four years came to an end on 31-3-1997. In the present case, an affidavit has been filed on behalf of the department. In the present case, it is the case of the department in the affidavit that the predecessor of the respondent No. 1 had passed an order of assessment under section 143(3) on 31-3-1995, computing the total income of the assessee at Rs. 2.86 crores (approx.). That, subsequently, another predecessor in office of the respondent No. 1 formed an opinion that the income chargeable to tax had escaped assessment. This was on 16- 3-1999. We have gone through the reasons. The position of law after 1-4-1989, is not in dispute. By virtue of a proviso to section 147, no action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 16 of paper book]. It is admitted position that reassessment proceedings have been initiated in the present case after the expiry of 4 years from the end of the relevant assessment year. As per Proviso to Section 147 of the Act, no action can be taken for reopening after four years unless the Assessing Officer has reason to believe that income has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Since in the case before us in the reasons recorded there is nothing to indicate that reopening is sought on the ground of the failure on the part of the petitioner to disclose fully and truly material facts, the initiation of re-assessment proceedings under Section 147 of the Act cannot be sustained and is, therefore, held to be bad in law. Accordingly, Assessment Order, dated 21/03/2022, passed under Section 147 read with Section 144B of the Act is quashed and consequently additions/disallowances made in the hands of the Appellant stand deleted. Thus, Ground No. 1 raised by the Appellant is allowed while all the other grounds raised by the Appellant are dismissed as having been rendered infr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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